Europe Dumps Again, Oil Spikes

Currently, DJI futures are 80.0 lower, S&P futures are 8.00 lower, and
Nasdaq 100 futures are 9.00 lower. In Europe, the FTSE 100 is down 73.10 points,
or 1.89%, the DAX is down 112.13 points, or 3.66%, and the CAC 40 is down 60.11,
or 2.08%. Japan was closed for the autumnal equinox holiday (wish we had one of
those), and the Hang Seng was down 13.35 points, or 0.14%. Interest rate futures
are sharply higher (get your refi in!), the dollar is lower, gold is higher, and
as I mentioned above, crude is higher.

Now we do have oversold indicators popping out the yin/yang, but my guess is
that it will be a sharp acceleration lower sometime in the next week and a half
before we get the bounce. Again, watch for easing chatter to surface ahead
tomorrow’s FOMC meeting. Also, keep your eyes open for intervention. As long as
we are imitating Japan, we might as well go all the way and begin manipulating
stock prices. Expiration is the best time to do it. The best way to detect
intervention is by watching the currency and bond markets. If you see the dollar
suddenly strengthening, or interest rate futures suddenly collapsing, there is
probably some sort of intervention about to be launched.

Volatility

Volatility tailed off on Friday, with the VIX losing 1.61 to 44.55, the
VXN losing 3.68 to 59.08, and the QQV dropping 3.60 to 50.03. Volatility is very
high, and that is one of the oversold indicators we are looking at. There may
eventually come a time when volatility begins to decline on the downside as well
as the upside, when investors finally throw in the towel, turnover drops like a
rock, and intraday volatility disappears as we begin a slow, miserable, grinding
bottoming process. But not yet.

Update: (09 /20/ 02)

(
C |
Quote |
Chart |
News |
PowerRating) — We were assigned on our short September 30 puts in our old
Citigroup (CLT) options. More on this later.

DJX — September 86/90 1:2 ratio call spread expired worthless.

(
TGT |
Quote |
Chart |
News |
PowerRating) — Sold half of our January 35 puts at $4.20, half at $4.00, to close.

(
QQQ |
Quote |
Chart |
News |
PowerRating) — September 23/26 1:2 ratio call spread expired worthless.

(
WAG |
Quote |
Chart |
News |
PowerRating) — Sold our January 35 puts at $4.00 to close.

New Recommendations

None.

Working Orders (Old Recommendations)

(
AHC |
Quote |
Chart |
News |
PowerRating) — Liquidate the October 65/70 put spread at $3.00, and use a
$71.00 closing only stop.

(
AMGN |
Quote |
Chart |
News |
PowerRating) — Sell half of the January 30/40 put spread at $5.00.

(
BP |
Quote |
Chart |
News |
PowerRating) — Buy the January/October 40 put calendar spread (buy the January 40
put, sell the October 40 put) for $1.15 (25%).

(
CCU |
Quote |
Chart |
News |
PowerRating) — Bid $1.50 for another 25% of the January 40 calls.

(
MMM |
Quote |
Chart |
News |
PowerRating) — Still working a $5.00 offer on another 25% of our October 110/120
put spreads, now us a $122.50 closing only stop.

Buy-writes

(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the January 15 buy-write at $12.05 (100%).

Proxy buy-writes

(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15 calls at $3.20 — left over from proxy
buy-write (50%). Left for dead.

Complex Strategies

(
IBM |
Quote |
Chart |
News |
PowerRating) — Long the January 50/60 put spread at $2.00 (50%).

(
KSS |
Quote |
Chart |
News |
PowerRating) — Long the January 60/70 put spread at $3.00 (25%).

(
S |
Quote |
Chart |
News |
PowerRating) — Long the January 35/45 put spread at $3.00 (25%).

(
TGT |
Quote |
Chart |
News |
PowerRating) — Long the January 35 puts at $2.50 (25%). Sold at $4.00, 9/20/02.

(
CCU |
Quote |
Chart |
News |
PowerRating) (2) — Long the January 40 calls at $2.50 (25%).

Call Spread Positions

DJX — Long the September 86/90 1:2 ratio call spread at $.50 (50%). Expired
worthless, 9/20/02.

(
QQQ |
Quote |
Chart |
News |
PowerRating) — Long the September 23/26 1:2 ratio call spread at $.50 (50%).
Expired worthless, 9/20/02.

Put Positions

None.

Spread Positions

(
AHC |
Quote |
Chart |
News |
PowerRating) — Long the October 65/70 put spread at $1.50 (25%).

C — Long the December/September 30  put calendar spread at $.975(50%). Sold
half at $2.20 on 9/16/02.

C — Long the January/September 30 put calendar spread at $1.20(50%). Sold
half at $2.45 on 9/16/02.

(
MMM |
Quote |
Chart |
News |
PowerRating) — Long the October 110/120 put spread at an average price of
$2.65 (100%).